Timber industry adapts to new realities
Whatcom businesses not out of the woods yet

by Christopher Key

 

No sooner had some Whatcom County businesses adapted to the Northwest Forest Plan developed by the Clinton administration in 1994 than the Bush administration slapped heavy tariffs on imported Canadian softwood. Depending on which business you talk to, the effects of the tariff on American markets range from negligible to devastating.

The tariffs were imposed because the Bush administration claimed that the Canadian government unfairly subsidized Canadian timber companies. US timber companies, it was alleged, could not compete with the low stumpage fees charged in Canadian timber sales.

As a result, Canadian companies are scrambling to find ways around the tariff and American companies are scrambling to find reliable sources of supply. Canadian timber giant Interfor is proposing to build a new facility in Sumas while others are looking to produce value-added exports not affected by the tariff.

There have been massive layoffs in Canada while companies try to figure out how to compete. Some, like Interfor, see no resolution to the dispute in the foreseeable future and are moving facilities across the line. This means a boost for Whatcom County, but a blow to British Columbia timber workers. Smaller companies without the means to relocate are simply closing their doors. Of the 32 sawmills on the BC coast, seven have shut down and five are operating at reduced capacity.

The World Trade Organization has ruled that the US was wrong in applying the duty to certain value-added products, but Canadian producers may not be able to wait for the cumbersome WTO process to settle the matter.

Dick Hammer of ALRT (A Logging, Roadbuilding and Trucking company) in Deming believes that ultimately, the Canadians will have to find new export markets. Meantime, his company plans to help make up for any shortfalls.

As the name suggests, ALRT is more than just a timber firm. That diversification has helped it survive the tough times since the timber crisis of the late 80s and early 90s. Hammer also relies heavily on Bill Westergreen, a graduate of forestry school who has skills that encompass a lot more than just deciding which trees to cut.

“He gets along with people,” Hammer said, “and that’s vital when negotiating with DNR (the state Department of Natural Resources) and private landowners. There are lots of regulations we don’t like. Bill finds a way to work within them and has built a solid relationship with DNR.”

Those are skills they don’t teach in forestry school. Logging companies that survive are those who can adjust to reduced cutting on National Forest lands and work within environmental restrictions.

Hammer also praised Westergreen’s ability to seek out timber purchases that will work for the company and its customers. This is an almost supernatural ability to make the right purchases in the face of a highly unpredictable market.

“If we buy five million board feet of hemlock and the price drops,” Hammer said, “we can lose as much as $60 per 1000 board feet.”

Increased mechanization has helped ALRT compete. Mechanized sites help keep workers off the ground, which reduces risks in a very hazardous occupation. New technology means that cutting, falling, trimming, bucking, bunching, yarding and sorting all can be done by machine if the site is favorable. What’s more, the mechanized sites reduce collateral damage to the environment by keeping logs off the ground as much as possible.

On steeper sites, workers are still required and ALRT has hired a former L & I (state Department of Labor and Industries) employee to oversee safety. Thirty-seven loggers work for ALRT at the moment and Hammer says that while they are oriented to production, they also do their best to minimize disturbances to the site.

“We have one of the best safety records in the state,” Hammer said. “Eighty-five percent of our workers are experienced and that results in fewer claims.”

Mechanized sites cut down on labor costs and improve safety, but require a huge capital investment. There may be over a million dollars worth of equipment on each site.

Merchandising is also an important to survival.

“We have to pick and choose our customers because we don’t always have the ability to meet everyone’s needs,” Hammer said. “The restrictions get tighter, the market continues to fluctuate, but we will survive.”

Great Western Lumber Company celebrated its 50th anniversary last year and is the only sawmill left in Whatcom County. Their niche is to take raw logs and turn them into finished products, primarily for small independent lumberyards. While they are not big enough to supply the needs of the big box retailers like Lowe’s and Home Depot, they can do small volume orders that the larger mills can’t touch.

“The big mills need to maintain that high volume market and they need to move their product right now,” said Great Western’s Jerry Millman. “We can accommodate custom cuts and special size needs that are not feasible in a larger mill.”

Logs for the mill come primarily from Whatcom County, although they also buy from Skagit and Snohomish and most come from private lands.

“Availability of logs is stable at the moment,” Millman said, “partially due to attrition of sawmills. Something had to give. We either needed more timber or fewer mills. We’ve seen some of both.”

Supplies have also been affected by the sharp downturn in the Japanese economy. Prior to that downturn, Japan was importing huge quantities of raw logs from the US and Canada. There are also new sources opening up in nations such as Russia, Chile, and New Zealand.

The tariff on Canadian softwood has not had the intended effect, according to Millman, since prices actually dropped after the tariff was levied. He points out that a similar tariff on imported steel has helped some lumber products become more competitive.

“Increased niche marketing,” said Millman, “is helping keep the industry exciting and healthy.”

He feels that people take wood products far too much for granted.

“Wood is used for houses, furniture, cabinets, not to mention the array of paper products and rayon,” said Millman. “If we don’t use wood, what is the environmental impact of what we use in its place? Metal has to be mined and refined. Plastics come from non-renewable petroleum. Our resource is renewable and requires little energy to produce.”

Millman also believes that consumers should consider the source when purchasing wood products.

“Does the wood come from environmentally responsible countries?” Millman asked. “Our restrictions are the tightest anywhere. We don’t live in a vacuum.”

The timber industry in Whatcom County remains relatively healthy because of its diversity.

“We’re not dependent on just one segment of the industry,” said Millman. “There’s still lots of jobs and variety out there.”

Remanners, as they are known in the industry, take wood products and remanufacture them for use in construction. Cascade Joinery has been doing it successfully for 12 years, two and a half at its current location. The Fairhaven firm specializes in timber frame construction as opposed to “stick built,” or 2x4 framing.

Timber frame construction is enjoying great popularity because of customers’ desire for natural materials and respect for fine craftsmanship. It does, however, depend to a greater extent on older trees because of the need for larger pieces. Standard 2x4s can be cut from trees of almost any size, but the 8x8, 8x12, 12x12 or even larger pieces required in timber framing are harder to come by.

“The market for custom homes has generally been lagging behind the rest of the construction industry,” said Jeff Arvin, co-owner of Cascade Joinery. “We’re just now coming out of an 18 month slow period.”

The softwood lumber tariff has not had a noticable effect on the supply and Arvin expresses disappointment with the tariff.

“US timber was competitive before the tariff,” Arvin said.

All of the material he uses is western softwood and about half of it is recycled or salvaged. That is one of the major advantages of timber frame construction over 2x4 framing. Not many 2x4s can be reused.

“There was an initial change in quality after the Northwest Forest Plan went into effect,” Arvin said. “Now, things seem to be back to normal.”

He attributes this to changes in the international market. Larger timbers used to be in great demand in both Europe and Asia, but that market has dropped off precipitously.

“Ours is a unique niche,” said Arvin. “I would not be in construction if it were not for timber framing. As a craftsman, I am attracted to the workmanship necessary in this business.”

The shaky economy has definitely impacted his business in the short term, but now people seem to be moving ahead with construction plans. Cascade Joinery has completed projects in 22 states, Canada and Japan.

“The good thing about this approach is that we can make most of the components here,” Arvin said. “They are eminently portable by land, sea or air.”

Cascade Joinery offers a lot more than just construction. They have a complete design staff and are experienced at collaborating with architects. Services range from providing just the framing to complete construction in the immediate area. There are usually four to seven projects underway at any one time, but Arvin likes to have years of work in the pipeline.

Pete and Laurel Slisz used to work for Cascade Joinery, but wanted to branch out. They desired a smaller operation and more personal involvement with the customers. The end result was Two Dog Timberworks just off Grandview north of Ferndale.

Niche marketing played a big role in their decision. Pete and Laurel saw an gap between what Cascade Joinery does and what laminated timber specialists like G. R. Plume are doing.

Their approach has enabled them to tackle projects like a timber framed office in Connecticut that features a 12 sided tower resembling a silo. They relish the opportunity to make their own decisions and take creative risks.

“The genius lies in making it look simple,” Pete said, “even though it’s really quite complicated. We know what we can do and if we don’t, we’ll figure it out.”

Pete and Laurel believe the softwood tariff is a nightmare.

“It’s going to make things a lot harder for homebuilders,” Laurel said, “and could devastate the construction industry in the long run.”

With Canadian timber at least temporarily off the map, Two Dog is getting its raw material primarily from Oregon. Like Cascade Joinery, they emphasize the use of recycled and salvaged wood. By using timber frame construction, “we’re creating recycled wood for the future.”

Because of the size of the trees formerly imported from Canada, the quality was unmatched. There are not a lot of choices when it comes to the type of timber required for this type of construction which leads Pete and Laurel to believe that the tariff is far too broad.

“You just can’t get 36 foot 10x20s from the US,” Laurel said. “We have to figure out a way around the roadblocks.”

One way is to purchase US timber and then send it to Canada for kiln drying and staining. That type of value-added work is not covered by the tariff.

“Two Dog is as busy as it can be right now,” Pete said. “People want to invest in tangible things rather than stocks. They want to hunker down and build a nest. Timber framing appeals to that instinct because it is built to last. The custom construction market was slower to come back than most, but it’s back.”

Three full-time employees now assist Pete in the shop while Laurel runs the office. They have the luxury of working in areas other than Whatcom County, but are surprised at the amount of demand for their services locally.

“We think the warmth and aesthetics of natural wood appeal to people in times like these,” said Laurel. “It offers strength and reality.”

The two supervisory personnel who give the company its name nodded their agreement.

Gordon Plume started his career as a stonemason and eventually obtained his General Contractor license. Stonework is, so to speak, hard. General contracting didn’t appeal to Plume’s creative drive, so he moved into timberworking. His niche is laminated beams and veneer work. He got so good at it that he was asked to do the timberwork on Bill Gates’ Lake Washington mansion.

“Timberwork offers me the opportunity to learn,” Plume said, “and to try different things. The needs of our customers are often unique. I never tell them it can’t be done. I just figure out how.”

Plume’s work on the Gates’ house so impressed the New York architect that he called on Plume to help with a synagogue he was designing. Not many people could create an elliptical dome measuring 32 by 48 feet out of wood. True to his philosophy, Plume didn’t say no. He figured out how to do it.

Building the dome involved 54 tapered ribs, no two of which were alike and none of which were square. They needed to look like solid oak, which involved some creative magic with veneer. In all, 635 pieces of planking were involved. The finished product is more like a work of art than a construction project.

After the people at the synagogue saw what he could do, they commissioned Plume to create a series of curved pews to complement the dome. Those are still under construction in Plume’s Smith Road shop.

“People are coming to realize that you have to do more value-added work to survive in the timber industry,” Plume said.

His business is not as dependent on old growth timber since he can use second growth and even plantation wood in the laminating process. Laminated beams offer more strength and stability than solid beams. Plume does, however, use some old growth in his veneers because of the quality of the grain.

The softwood tariff is having a big effect on Plume’s operation since much of his material comes from Canada. That is somewhat offset by the decline in Japanese demand. He also sees more quality wood coming out of American forests because the trees are not being harvested as often.

“We take value-added work about as far as it can go,” Plume said, “and that is what the timber industry needs to survive.”

Yes, there have been some difficult adjustments in the Whatcom County timber industry over the past couple of decades. The surviving businesses, however, seem to be in robust health. And it’s important to remember that the tongue depressor used to check almost everyone’s health is still made of wood.